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Except for expenses subject to section 274(d), if books and
records are not available to substantiate business expense
deductions, the Court may estimate the amount of deductions to
which a taxpayer is entitled, Cohan v. Commissioner, 39 F.2d 540
(2d Cir. 1930), if there is a sufficient factual basis in the
record that allows us to do so, Vanicek v. Commissioner, 85 T.C.
731, 742-743 (1985). Here, there is no factual basis in the
record on which an estimate can be made. Petitioner made no
attempt to reconstruct the business records that he claims are
now unavailable to him. Instead, he makes only a broad assertion
that he is entitled to business expense deductions for each year
in issue. On the basis of the record before us, we are not
satisfied that petitioner has established his entitlement to any
deduction not already allowed by respondent in the notice of
deficiency. Therefore, petitioner is not entitled to any trade
or business expense deductions for any of the years in issue.
The deficiencies for the years in issue, including respondent’s
claim for increased deficiencies for the years 1990 and 1993, are
therefore sustained.
Respondent also determined that petitioner is liable for
additions to tax for: (1) Failure to file tax returns under
section 6651(a)(1); (2) failure to make timely payment of taxes
under section 6651(a)(2); and (3) failure by an individual to pay
estimated income tax in accordance with section 6654.
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Last modified: May 25, 2011